Companies across sectors in aviation, healthcare, retail and entertainment are bracing for staff shortages, demand squeeze and supply disruptions due to variety of Covid-related restrictions imposed in several states as well as the rising spread of Omicron. While the situation across supply lines is near normal so far, industry people expect turbulence going ahead as employees health concerns cause shortages in several sectors.
Banking and financial sector is another area where stress could rise due to part closure of business activity. The healthcare sector, for instance, is preparing for far more in-home care for patients affected by Omicron as doctors expect fewer hospitalisations, according to experts.
“Overall there is a good amount of preparation. We are preparing for more treatment through video calls and (we expect) a lot of it will be home care,” said Dr Naresh Trehan, chairman and managing director of Medanta and chairman of CII National Council on Healthcare. Trehan noted that while there was no shortage among hospital staff due to infections so far, widespread infection potentially causing a shortage in staff was a concern.
Apart from the service industry, small and medium scale manufacturing units, where blue collar workers had returned to work have also been asked to come in shifts or the timings have been reduced to allow them to get back to their homes before the night curfew rules kick in.
“We have reduced our factory timings till 6 pm for the safety of our labour. Today, we have a total strength of 800 employees and around 50% of them have been given work from home,” Avneet Singh Marwah, chief executive officer at Noida-based television manufacturing company SPPL, said.
Marwah also expects an impact on supply chain and imports as the number of cases rise with states bringing in their own rules to curb the spread of the Omicron variant of Covid-19 virus.
According to Mumbai-based movie business analyst Taran Adarsh, at least four prominent film releases have been postponed on account of Omicron concerns. These include SS Rajamouli’s RRR, Shahid Kapoor-starrer Jersey, Yash Raj Films’ Akshay Kumar-starrer Prithviraj and the latest one being Radhe Shyam — produced by T-Series starring Prabhas. It is noteworthy that during the first wave of Covid-19 in 2020, lockdowns and shutdowns of movie theatres led producers to release their films on OTT platforms such as Netflix, Amazon Prime, Disney+Hotstar, etc.
Aviation is another key sector being directly impacted. Even as demand for domestic travel continued to be robust towards the end of December, the rising number of Covid-19 cases and the various restrictions imposed by state governments in the last week of December led to an uptick in cancellations. West Bengal, for example, introduced restrictions on flights from Delhi and Mumbai to allow airlines to operate such services only on Mondays, Wednesdays and Fridays.
On Tuesday, daily domestic air passenger traffic fell below the 3-lakh mark for the first time since November on back of the third-wave concerns. According to data sourced from the Ministry of Civil Aviation, the total number of departing domestic passengers on Tuesday was 2,85,965, and the total number of domestic flight departures was 2,660. At its peak in December, the number of flight departures in the country was more than 2,800 — meaning that around 200 flight departures have been cancelled in the recent days.
“So far what we’ve witnessed is that travel restrictions are coming but they’re not as serious as the curbs on movement within cities like Delhi and Mumbai. That is what is causing people to amend their travel plans. On the international sectors, there has been a palpable impact since the Omicron outbreak but now even domestic bookings are getting impacted,” a senior executive at a low-cost airline said.
Notably, in the US, a major cause of cancellation of domestic flights was not the receding travel demand but hundreds of airline crew members getting infected with Covid that forced the carriers to cancel flights.
India’s services sector activity moderated to a three month low in December, mainly due to deterioration in international demand linked to Covid curbs. The Purchasing Managers’ Index (PMI) for services fell to 55.5 in December from 58.1 in November, as per latest data released by the analytics firm IHS Markit. A reading above 50 indicates expansion in economic activity and a number below that signals contraction.
“Underlying data suggested that the latest increase in new orders was centred on the domestic market, as new business from abroad fell further. The deterioration in international demand was linked to COVID-19 restrictions, particularly around travelling…December data showed renewed job shedding in the service economy, but the rate of contraction was only slight,” IHS Markit said.
To navigate state-wise curbs, domestic retailers are calling for parity in restrictions on traders as restrictions on cities like Delhi may lead to “trade transfer” as customers could easily travel to neighbouring states with fewer restrictions. “Lack of parity is encouraging people to go to other cities and make purchases. Particularly for cities and areas sharing borders with other states, said Praveen Khandelwal, secretary general of Confederation of All India Traders (CAIT). This is affecting B2B (business-to-business) trade and not just business-to-consumer trade. Restrictions like odd-even in Delhi was impacting the estimated 5 lakh traders that come to Delhi to purchase supplies as they were not able to make all the required purchases on a given day due to some shops being closed.
Footfalls in key markets of Delhi has come down due to odd-even restrictions as consumers seem to be postponing purchases, said a handloom shopkeeper in Gandhi Nagar market in East Delhi.
Over the last week, key states including Maharashtra, Karnataka, Gujarat, Delhi, West Bengal, Haryana, Goa among others, have clamped down on economic activities, reduced working hours for shops, restaurants, and hotels, and put a cap on number of people in marriage functions or cinema halls. On Tuesday, fresh restrictions including a weekend lockdown were announced in Delhi.
Restaurants, which have been running at 50 per cent capacity since the announcement of unlock phase one, should be allowed to operate for longer hours to avoid the rush, National Restaurant Association of India president Anurag Katriar said.
“Almost all the restaurants are working with doubly vaccinated staff and that too in a very tightly regulated environment. All other industries and activities in other walks of life are continuing unperturbed. So perhaps it is only for optics that the restaurant activities are curtailed. We just hope that there is no knee-jerk reaction from the government and authorities going forward,” Katriar said. An employee at a restaurant in Kailash Colony, Delhi, said the footfalls have thinned down sharply and weekend lockdown means “people almost do not step out for lunches and dinners.”
(With inputs from Pranav Mukul)